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Memory DRAM Price Increases…

Feb 18, 2021 | News and Insights

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Leading storage and memory specialists M2M provide insight into  DRAM’s demand and supply fluctuations, analysing why DRAM price increases look set to continue.

 

Embedded in PC’s, workstations and servers, DRAM is essential to the rise in Smart Homes, IoT, the rise of Public Cloud, 5G roll-out, the growth of E-Commerce service.  A true barometer for the health of the technology sector, DRAM supply is subject to global market forces, driving DRAM price increases across the board.  Currently there is a global shortage of DRAM and NAND Flash Products.  This looks set to continue the trend of DRAM price increases.

M2M we have long talked about the impact of the exponential data growth curve and the digital transformation. What the wider market and audience may not realise however, is the range of contributing factors that influence  shape and ultimately make this huge global development possible.

In every device that has some form of compute capability, you will find some form of DRAM (Dynamic Random-Access Memory) – otherwise known as DIMM, Memory or RAM. The reason for this being is that the component responsible for compute, whether that be a CPU or Management Silicon-Based Chip, will need to be fed fast or ‘hot’ data by DRAM for the compute component to process and make decisions and changes off the back of. That data will be sitting on the DRAM component, which will be then transferred into the cache of the compute component to then be processed.

So, everything from your smart TV, to your microwave, to your coffee machine and in more widely recognised terms your PC, Smart Phone or Tablet, will have a requirement for DRAM in order to make them work. Of course, these components in the above varying devices will take on various form factors, but the underlying technology will be the same as well as the underlying manufacturing process, and the factory they come out of.

What this means for the wider global market is in each and every digital transformation process, be it Smart Homes, IoT, the rise of Public Cloud, 5G roll-out, the growth of E-Commerce service delivery (especially during the Covid-19 pandemic!), the supply and demand of DRAM will be vulnerable and volatile as a result. If a Public Cloud Provider is deploying a new Datacentre in one part of the globe, the availability of DRAM for Servers may go short in another area of the market. Similarly, when new products from market-leading smartphone manufactures are brought to market, the global manufacturers of DRAM will re-assign their production output to support Mobile DRAM, and thus cause shortages in other areas. It is an extremely sensitive market.

At M2M, we have historically been market leaders for the distribution of DRAM products. Our key area of focus has revolved more in the consumer, corporate and enterprise PC and Server market; however, we have long been subject to global market forces affected by DRAM supply into other complementary areas of this technology and aforementioned applications.

We are currently in a global shortage for the supply of DRAM and NAND Flash Products, which in turn greatly affects the volatility of price and availability. In just a few weeks, we have seen our vendor partners/manufacturers increase their pricing as a result, which is by no means unusual and is purely a reflection of the supply and demand market forces they are experiencing. After all, IT components that are this integral for the overall operation of global digital products and services, are in their very nature a commodity product.

The reason for this shortage comes down to a multitude of factors, most prominently the global supply of the raw materials, minerals and products that makes up the silicon and wafer components that are processed and integrated into a completed DRAM module. However, what is not widely known or considered is the effect of the areas where these FABs are located, and the impact that Geographical Events have upon them. FABs in Japan, Korea or Taiwan are often hit by earthquakes, which can down production for a period of time and have a knock-on impact on global supply – and it happens far more regularly than you’d think. Manufacturers now have taken steps to improve and lessen the impact of these events, but who’d have an earthquake in Japan could affect the outcome of a large datacentre roll out on the other side of the world? These things do happen!

Arguably M2M’s biggest and most known & trusted Value- Added Service is our ability to understand and have experience in this volatile market, and from there advise and consult our customers to support their business, through stringent as well as lax times in the market. This is the very reason why we have long been regarded as a trusted supplier & advisory for most, if not all of the UK’s Top Channel Resellers, SI’s & E-Tailers.

The exponential data growth curve and the digital transformation era that has been in motion globally for quite some time now are things we have long talked about at M2M. What the wider market & audience may not realise, however, are the underlying contributing factors that influence & shape and ultimately make this huge global development possible.

 

In every device that has some form of compute capability, you will find some form of DRAM (Dynamic Random-Access Memory) – otherwise known as DIMM, Memory or RAM. The reason for this being is that the component responsible for compute, whether that be a CPU or Management Silicon Based Chip, will need to be fed fast or ‘hot’ data by DRAM for the compute component to process and make decisions and changes off the back of. That data will be sitting on the DRAM component, which will be then transferred into the cache of the compute component to then be processed.

 

So, everything from your smart TV, to your microwave, to your coffee machine and in more widely recognised terms your PC, Smart Phone or Tablet, will have a requirement for DRAM in order to make them work. Of course, these components in the above varying devices will take on various form factors, but the underlying technology will be the same as well as the underlying manufacturing process, and the factory they come out of.

 

What this means for the wider global market is in each and every digital transformation process, be it Smart Homes, IoT, the rise of Public Cloud, 5G roll-out, the growth of E-Commerce service delivery (especially during the Covid-19 pandemic!), the supply and demand of DRAM will be vulnerable and volatile as a result. If a Public Cloud Provider is deploying a new Datacentre in one part of the globe, the availability of DRAM for Servers may go short in another area of the market. Similarly, when new products from market-leading smartphone manufactures are brought to market, the global manufacturers of DRAM will re-assign their production output to support Mobile DRAM, and thus cause shortages in other areas. It is an extremely sensitive market.

 

At M2M, we have historically been market leaders for the distribution of DRAM products. Our key area of focus has revolved more in the consumer, corporate and enterprise PC and Server market; however, we have long been subject to global market forces affected by DRAM supply into other complementary areas of this technology and aforementioned applications.

 

We are currently in a global shortage for the supply of DRAM and NAND Flash Products, which in turn greatly affects the volatility of price and availability. In just a few weeks, we have seen our vendor partners/manufacturers increase their pricing as a result, which is by no means unusual and is purely a reflection of the supply and demand market forces they are experiencing. After all, IT components that are this integral for the overall operation of global digital products and services, are in their very nature a commodity product.

The reason for this shortage comes down to a multitude of factors, most prominently the global supply of the raw materials, minerals and products that makes up the silicon and wafer components that are processed and integrated into a completed DRAM module. However, what is not widely known or considered is the affect of the areas where these FABs are located, and the impact that Geographical Events have upon them. FABs in Japan, Korea or Taiwan are often hit by earthquakes, which can down production for a period of time and have a knock-on impact on global supply – and it happens far more regularly than you’d think. Manufacturers now have taken steps to improve and lessen the impact of these events, but who’d have an earthquake in Japan could affect the outcome of a large datacentre roll out on the other side of the world? These things do happen!

 

Arguably M2M’s biggest and most known & trusted Value- Added Service is our ability to understand and have experience in this volatile market, and from there advise and consult our customers to support their business, through stringent as well as lax times in the market. This is the very reason why we have long been regarded as a trusted supplier & advisory for most, if not all of the UK’s Top Channel Resellers, SI’s & E-Tailers.

What’s Happened Over The Years?

 

To allow our customers to navigate such a volatile DRAM market, we have compiled a timeline of recent market trends and analysis of these events. This will subsequently equip our customers with the expertise of understanding market changes and the determining factors, and therefore the ability to understand and anticipate future changes.

(Q3/4) 2018(Q1/2) 2019

  • DRAM prices plummet in the market. Primarily caused by oversupply, quality issues and increased capacity but in turn caused an influx of server memory being returned and sold on the open market, resulting in a further crash to pricing.
  • Manufacturers cut back and adjusted their output capacity in favour of NAND Flash.
  • Major CPU shortages that lead to decreased production and sluggish demand.

(Q1) 2020

  • COVID 19 caused huge lockdowns in China during January, closing the doors to the sites assembling DRAM and Flash NAND SSD causing extended lead times in the supply chain.
  • February/ March 2020, COVID 19 hits Europe and Lockdown begins. This caused an explosive demand for Lap Tops Notebooks and Tablets to support working from home and equipping the NHS, Education Sector, Universities and Research & Life Sciences sector. Server Memory, DRAM Memory, Flash Memory/SSD’s, ICs and SO Dimms were once again were in strong demand.
The Impact

Initially, no one could anticipate the worldwide severity of COVID 19 and after an initial roll out of Lap Tops, Memory Upgrades and Datacentre upgrades demand started to slow. Certain sectors, such as Online retail and Server builds flourished and continue to do so but the High Street Retail , Leisure, hospitality, and the travel sector have been devastated. The IT and Telecoms business remained relatively firm with overall demand down between 20%- 30% in Europe and the Americas, and roughly down 15-20% on a Worldwide basis.

(Q3/4) 2019

  • November/ Q4 2019 demand started to pick up and prices increased slowly into December
  • December saw a very quick increase in DRAM prices by 5-10 % which continued to grow into Q1 and in some cases reached a 20-30% rise.
What caused demand to pick back up?

The Key drivers were the leading Worldwide Hyper-Scalers and Cloud providers, such as Amazon (AWS) ,Google , Microsoft Azure , Facebook , Alibaba in China and the far East. Their Datacentres were seeing exponential growth to accommodate for a huge growing demand for their services and in result saw a knock-on requirement in storage & memory capacity driven by social media & complimentary apps, web/hosting services, their own data, analytics & operations. These type of companies are now amongst the largest consumers of Server DRAM and Enterprise SSD’s in the World. Their increased capacity demand is driven by things such as social media apps including: Instagram, Youtube, Facebook, Twitter, TikTok, Pinterest, Snap Chat, as well as web based services such as Gmail, Google Suite, Office 365 amongst others. An additional driver in the DRAM market came from Corporates , B2B , Retail , E-commerce , Banking , Insurance, Manufacturing Applications being used in either Private Cloud or Hybrid Cloud environments.

(Q3/4) 2020

  • November/ Q4 2019 demand started to pick up and prices increased slowly into December.
  • December saw a very quick increase in DRAM prices by 5-10 % which continued to grow into Q1 and in some cases reached a 20-30% rise.

2021 Market Predictions

 

We have seen significant increases in market prices during the first 4-5 weeks of 2021 and we expect these prices to increase further after Chinese New Year.

 

So why do we believe DRAM prices will rise further in 2021?

 

1. The Telecoms 5G Roll out in the Far East, Europe and USA.
There will be a massive Dram IC, Module SO-Dimm and Server Memory uplift in China Driven by Telecom Focused Vendors and the manufacturing of Server, Storage and Smartphones to support and feed the 5G demand. This will once again drive exponential growth in demand with increased Dram and Flash NAND Capacity in phones, mobile devices as well as set-top boxes for streaming 5G services in China and the Far East, followed by Europe and Americas driven by Ericson, Nokia, ATT, Samsung, Motorola and Apple.

 

2. Stable and Increased demand in Datacentre
Increased Cloud Service Provider requirements in the Hyper-Scalers – AWS, Facebook, Microsoft Azure & Microsoft Services, Social Media, Working from Home requirements, Corporates, B2B Cloud Demand and the Education Sector.

 

3.  Research and Application
We can expect to see continued growth in demand for DRAM from Life Sciences, Medical Research & Genomic Sequencing Teams (in particular at the moment with Vaccine development), Artificial Intelligence, Big Data & Analytics, and Track and Trace applications. There will also be demand-driven by HF Trading & Business-as-usual FSI Markets, Surveillance, Security and Facial recognition.

 

4. Gaming
There has been a huge growth in the online gaming sector during lockdown restrictions. This includes PC-Online, Play Station Online/X-Box Online Services as well as a huge growth in the Gambling/E-Gaming Companies across Europe. The relaxing of Gambling Laws in the US should also see a spike in demand as the E-Gaming Operators look to roll out Datacentres State by State. In addition, there is increased demand for DDR5 Graphics ICs which was already steadily rising due to the rise of Nvidia GPU’s in the AI-Datacentre-HPC sector, as well as a huge move to Cloud-Hosted Gaming, which will serve as the gaming platforms of the future.

 

5. Q2-Q3 2021 General Recovery
As offices begin to reopen, employees begin to head back to the workplace and life slowly heads back towards normality, there will be an inevitable demand from the Corporate, Retail, Hospitality, Travel, Aerospace & Industrial sectors as they open back up for business and aim to return lost revenues. There is also pent up demand in these customers as projects were placed on hold during the pandemic, and now these customers will look to streamline their IT & Processes to put them back to the top of the pile in their respective markets.

 

6. Broadcast – Animation – CGI
I think we all know how important and widely used Broadcast Services has been during the pandemic, as well as the known and loved Streaming Platforms. Like all the industries above – these are massively driven and supported by DRAM – fast content delivery service will depend on that data being kept a) close to the CPU on those content delivery servers (i.e. on DRAM) and close to the End User, I.e. in Datacentres locally to you! 5G will also be driving this industry as remote content delivery becomes faster and more widely used!

Our Advice to Customers

 

By way of keeping our customers updated with ongoing market forces & fluctuations and allowing us to deliver our trusted advisory service to our customers as a leading Value Added Distributor, we’re proud to announce a Monthly Market Update call that our customers and partners can join to receive the consultation & advisory services they need to support their businesses & customers.

All our Product & Account Manager’s offer a customer-led supported service. A big part of this includes being highly trained to be able to provide the latest market advise as well as advising on the latest technologies & releases. For customers with larger, more run-rate requirements, we recommend scheduling a forecasting session with us to ensure the supply of DRAM into your business remains consistent.

We are also very much an extension of our manufacturer vendor partners, who are always happy to assist us with any technical enquiries if we cannot answer them ourselves, and we run regular training sessions on new products & technologies – so be on the lookout for any invites!

Alongside this, we will continue to post regular market updates under the ‘News and Insights’ section of our website. Subscribe below to receive email notifications regarding new posts and to receive future, exclusive, information on the memory and storage market outlook.

Thank you all for your support of M2M’s Business, and we hope to be working closely with and supporting you all long into the future.

 

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Our DRAM Specialists:

Our DRAM Specialists

Steve Deacon 
Internal Sales Director
Steve@m2m-direct.co.uk
0208 315 4004
LinkedIn

 

Montell Allen
Account/ Product Manager
Montell@m2m-direct.co.uk
0208 315402
LinkedIn

Our DRAM Specialists:

Steve Deacon 
Internal Sales Director
Steve@m2m-direct.co.uk
0208 315 4004
LinkedIn

Montell Allen
Account/ Product Manager
Montell@m2m-direct.co.uk
0208 315402
LinkedIn